Ryanair boss defends business model

Ryanair chief executive Michael O’Leary has hit out at “ill-founded speculation” that the airline’s entire business strategy could be in jeopardy if the EU Commission rules that the subsidies it receives from Charleroi airport are unfair.

The European Commission is currently investigating the airline’s flights to and from Charleroi airport in Belgium. Last week a French court ruled that Ryanair cannot continue flying to Strasbourg pending the results of an appeal about subsidies on the route.

Speaking about the forthcoming Charleroi ruling Mr O’Leary said: “We remain confident that Commissioner de Palacio will in her decision formulate a framework which will not just allow but encourage all publicly-owned airports to compete on a level playing field with privately-owned airports all over Europe.

He added: “There has been some ill-founded speculation that this decision may adversely damage Ryanair’s business model. This is not the case. Publicly-owned airports, particularly in the regions of Europe, will continue to compete aggressively to win the low fare, high volume business which Ryanair generates and no EU ruling could ever prohibit or constrain publicly-owned airports from competing with the many privately-owned airports to which Ryanair operates.”

Mr O’Leary added that the airline’s business model was robust, and that strong traffic numbers would continue “albeit at lower than expected yields.”

Speaking to TravelMole, a top industry analyst agreed that Ryanair may not be in too much trouble. Mark Riseley, senior travel industry analyst at GartnerG2 explained that the airline industry is full of complicated deals and that many traditional carriers would not bear too much scrutiny on the issue of subsidies. According to Mr Riseley this might make some full-service airlines reluctant to make too much of Ryanair’s current troubles.

He told TravelMole: “BA may be different, but certainly in Europe there are a lot of ex-state owned carriers who have various ways of getting money. There are a lot of discreet ways you can get indirect subsidies and if carriers push to much on this, they risk the spotlight turning on them.”

And he commented: “I think it’s a remarkable coincidence that the first two routes where Ryanair is being investigated are the home of the European Parliament [Strasbourg] and the home of the European Commission [Brussels].”

See our previous stories:

19-Sep-2003 ABTA takes on Ryanair
19-Sep-2003 Ryanair forced to end Strasbourg flights
17-Sep-2003 Holiday price must include security charge, says ABTA
15 Sep 2003Another airport in trouble over Ryanair fees
05 Sep 2003 Ryanair pleads with EC over Charleroi deal
27 Aug 2003 Ryanair to suspend Strasbourg service</A